Senate GOP to push amendment

Expect much disagreement over when to make tax caps permanent.

Expect much disagreement over when to make tax caps permanent.

November 09, 2008

INDIANAPOLIS (AP) -- Indiana Senate Republicans said Friday that enacting a balanced budget, protecting education funding and taking the next step toward amending property tax caps into the state constitution are priorities in the upcoming session. Senate Appropriations Chairman Luke Kenley, of Noblesville, said that given the slumping economy, the state might not take in enough revenue to increase funding for schools and universities in the two-year budget the General Assembly must pass in 2009. But he said that avoiding cuts from current levels was a top goal for Republicans, who have a 33-17 majority in the Senate. Senate leaders also said that passing a resolution a second time this year to amend caps on property tax bills into the constitution is a must. Doing so would put the measure before a statewide referendum in 2010. But that priority could set the stage for a battle with Democrats who control the House. Democratic House Speaker Patrick Bauer, of South Bend, has strongly suggested waiting until 2010 before deciding whether to pass the resolution a second time. The phased-in caps, which were enacted into law last session, will save property taxpayers an estimated $229 million this year and $524 million in 2010. But that is money that school districts and local governments won't get, although lawmakers steered an extra $120 million to schools over the next two years to soften the hit on them. Bauer shares concerns with local government and school officials that the caps could force cuts in public safety and other local services, or lead to big increases in local option income taxes. He said lawmakers should gauge the impact of the caps this year and decide in 2010 whether to move forward on a constitutional amendment. Under the law, property tax bills on homeowners this year are limited to 1.5 percent of their home's assessed value, with 2.5 percent limits on rental property and 3.5 percent on business property. In 2010, the caps on homeowner bills would drop to 1 percent of assessed value, 2 percent for rental property and 3 percent for business property. Those are the levels that would be amended into the constitution. If the resolution is not passed a second time this year or next, then the long process of amending the constitution would have to start all over again. Bauer said Thursday that the reason the caps were phased in "is to make sure that this is something workable and you could continue to have public safety, for instance, and other services and it wouldn't force up other taxes in an outrageous manner." He said he was open to amending the caps into the constitution, "but it is subject to the actual experience in '09." But Republican Gov. Mitch Daniels and Republican leaders in the House and Senate want to move forward on the constitutional amendment this year. Senate President Pro Tem David Long, of Fort Wayne, said he is concerned that the resolve to amend the constitution might weaken unless lawmakers pass the resolution a second time in 2009. Putting the caps in the constitution would prevent judges from striking them down and make it more difficult for future legislatures to undo. "I think moving forward now makes a strong statement to the taxpayers of this state that we intend to make these permanent," Long said. "We think it's important to move forward and press forward immediately and not wait and listen to the hues and cries of the local governments because there is some belt-tightening going on throughout the state," he said. "We understand that and we knew that was coming, and so did they." Long said enacting a balanced state budget was also a must. "It's crucial that in these economic times that the state live within its means," he said. Kenley said that could mean no increased funding for schools and universities. "If we get an opportunity to increase education by an upturn (in the economy), then that is listed as a priority and we would want to do that before doing other things," he said.